MCQS on Fiscal Policy

Question 1

Fiscal policy is the policy of:

Accepted Answer

The Government regarding taxation, public expenditure, and public debt

Answer

The Central Bank regarding money supply

Answer

Commercial banks regarding loans

Answer

SEBI regarding the stock market

Question 2

Which of the following is a tool of fiscal policy?

Accepted Answer

Government Spending

Answer

Open Market Operations

Answer

Cash Reserve Ratio (CRR)

Answer

Bank Rate

Question 3

When government expenditure exceeds its revenue receipts and non-debt capital receipts, the resulting gap is called:

Accepted Answer

Fiscal Deficit

Answer

Revenue Deficit

Answer

Primary Deficit

Answer

Budget Deficit

Question 4

Primary Deficit is calculated as:

Accepted Answer

Fiscal Deficit minus Interest Payments

Answer

Revenue Deficit minus Capital Expenditure

Answer

Total Expenditure minus Total Receipts

Answer

Fiscal Deficit minus Revenue Deficit

Question 5

Which of the following describes 'Expansionary Fiscal Policy'?

Accepted Answer

Decreasing taxes and increasing government spending

Answer

Increasing taxes and decreasing government spending

Answer

Increasing interest rates

Answer

Decreasing the money supply

Question 6

The FRBM Act stands for:

Accepted Answer

Fiscal Responsibility and Budget Management Act

Answer

Financial Regulations and Banking Management Act

Answer

Federal Revenue and Borrowing Management Act

Answer

Fiscal Resources and Business Management Act

Question 7

Which of the following is a Direct Tax?

Accepted Answer

Income Tax

Answer

Goods and Services Tax (GST)

Answer

Customs Duty

Answer

Excise Duty

Question 8

Deficit financing implies:

Accepted Answer

Printing new currency notes by the central bank to fund the deficit

Answer

Borrowing from the public only

Answer

Selling government assets

Answer

Increasing tax rates

Question 9

A 'Progressive Tax' system is one where:

Accepted Answer

The tax rate increases as income increases

Answer

The tax rate decreases as income increases

Answer

A flat tax rate is applied to all income levels

Answer

Only the poor pay taxes

Question 10

Who presents the Union Budget in the Parliament of India?

Accepted Answer

The Finance Minister

Answer

The Prime Minister

Answer

The RBI Governor

Answer

The Chief Economic Advisor